Bad economy is good for bartering

Assign value

Americans are used to giving merchandise a dollar value, so determining exactly how many DVDs a dental filling is worth can be tricky.

"The newer the content in terms of popularity, like the latest movie or CD, the faster it moves. And classics will go, too," says Robert Alvin, the president of CD-, DVD- and game-trading site BarterBee. On some barter sites, including BarterBee and Barter Bucks, you assign your merchandise or service a point or credit value. Once you accrue points by selling something into the system, you can buy other items with them. In most cases, one point is roughly equivalent to $1.

As on online auction giant eBay, the comments left about an account can also help you avoid the possibility of other people not delivering on their end of the bargain. "You have to list the condition (of your merchandise) appropriately," Alvin says. "If it's reasonably listed and you don't overprice it, stuff goes fast."

Consider taxes

Income from bartering is taxable, and barterers are required to report transactions to the Internal Revenue Service. Businesses or tradespeople can deduct costs incurred to perform the work that was bartered. But small, informal and noncommercial arrangements generally slide under the radar of the IRS.

"The consumer end of it has always been a very gray area because there is no reporting that takes place, so the IRS has no way of tracking those transactions, and the people themselves probably don't have a receipt," says Tom McDowell, the executive director of the National Association of Trade Exchanges. "If you make a profit, then it would be a taxable event. If you sell it for less than you paid for it, then it would not be a taxable event because you are not making money."

Get creative

Some people are using sites such as Know Your Trade to swap houses for affordable vacations. Furniture, computer services, hypnosis, cabinetry, horseback riding lessons, and hair cutting and coloring have all been bartered online, in addition to the more typical movies and compact discs.

"The barter category is sort of adventuresome. People like to think outside the box more than in other categories," Craigslist's Buckmaster says. "It is a little more creative than cash transactions, and people do let their imagination run wild."

This article was reported and written by Emily Brandon for U.S. News & World Report.

Published Oct. 22, 2008

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